Mandiri Sekuritas KIJA : Ministry of Transportation to follow up railway connection construction on Cikarang Dry Port (KIJA, Rp115, Buy, TP idr 265)

􀂄 Following Hatta Rajasa, the coordinating minister for the economy, suggestion earlier this week, on the urge to construct railway connection on Cikarang Dry Port to Tanjung Priok, the Ministry of Transportation followed up with asking PT Kereta Api (KA) to imply the same proposal as this purposed to accelerate container deliverables which currently accommodated through road way. The government expects the construction to be completed within 3 months.

􀂄 The construction is believed will give positive impact to KIJA as the owner of Cikarang Dry Port. Cikarang Dry Port serves as an extension of Tanjung Priok, located on 10ha area of land with 150k TEUs capacity, extendable up to 150ha. Upon reaching TEUs of 276k throughput units by 2012, net income contribution from the dryport is expected to be about US$5mn/year. Note that our TP of Rp265 excludes any contribution from the dry port which we see as an additional catalyst in the 2-3 years. We maintain buy, trading at 75% discount to NAV10.